Real Estate Talk:
Buying a Condo
Rules to follow when purchasing a condominium and the state of the market
By Joseph Marovitch
Updated January 30, 2019
Two years ago there were 3000 vacant new construction condos on the market and we all wanted to know why developers were building so many so fast. Now we know. Developers knew the island of Montreal was running out of space, that prices for single homes would rise as inventory reduced and people had to live somewhere. Therefore the 600 square foot condos at $500 to $600 per square foot arrived on the market and people purchased these.
In the past, developers who sold condos held all the cards. The developer set the terms of payment and buyers abided. Example: 15% with accepted promise to purchase, 15% half-way to delivery and the balance at signing. Today is it is worse. Most of the condos that have been built over the past two years are sold. Developers are still building more new construction condos but less than two years ago since they have run out of space. Prices continue to rise and Montreal, unlike Vancouver and Toronto, is a seller’s market, that has not been maxed out yet.
Purchasing a condo in Montreal can be tricky. There are many developers but only a few very good ones. By good I mean developers who deliver on time, use good materials and do not over price. Buyers can narrow their choice with several of their own criteria and three general rules which I would suggest following.
Developers are still building more new construction condos but less than two years ago since they have run out of space. Prices continue to rise and Montreal… is a seller’s market, that has not been maxed out yet.
After deciding how many bedrooms and bathrooms are required along with amount of square feet, parking and location needed, the rules to follow are:
- Choose a condo that is built by a developer who has been in the business for some time and has a proven track record of using good material and delivering on time.
- Choose a location that is in demand and easy to sell at a later date. Griffintown, by the canal, by the Atwater market, Westmount, NDG, the Golden Square Mile are all good locations. Areas that are developing with new daycares, shopping centers, restaurants and boutiques are great.
- Do not over-pay for a condo. Purchase at market value or below. Overpaying for a condo and especially a new construction, with taxes on top of the purchase price, will be very difficult to recoup when you sell, unless you keep the condo for a very long time. As condos are usually part of the “circle of life”, that is you sell them as soon as you get married or have children, means you most likely will not keep the condo long enough to profit if you overpaid.
Should you have questions or comments, please refer to the comments section at the bottom of the page. As well, to view past articles, click here.
Have a great week!
Next article: The perils of overpricing
STATE OF THE MARKET
Real Estate prices continue to rise faster than Toronto and Vancouver however a drop-in sales is expected as well. New constructions have slowed down and more and more buyers are searching in the suburbs to find homes.
Foreign investors have been snatching up new construction condos and single homes for two reasons. One reason is that Montreal is still one of the safest places to invest your money compared with Asia, the Middle East, Europe and even the USA. Foreigners will place money in Quebec real estate, in a holding pattern until the money is required. They then sell the property for the capital gain.
Many domestic investors will do the same thing, not for the safety but for the capital gain. The forecast for Montreal is that real estate on the island will continue to increase in price. Therefore, if the investor purchases property in a good location at a market price, holds on to the property, even if it were to collect no rent, the investors would still make money in the end when they sell the property. They would receive a capital gain which is taxed less than regular income. The concept is similar to purchasing gold or art and just holding it for a period of time. It simply increases in value.
Those who understand the Montreal market relative to global markets along with current political events will make money in our market.
Joseph Marovitch has worked in the service industry for over 30 years. His first career was working with families from Westmount and surrounding areas, hosting children between the ages of 6 to 16 as the owner and director of Camp Maromac, a sports and arts sleep away summer camp established in 1968. Using the same strengths caring for the families, such as reliability, integrity, honesty and a deep sense of protecting the interests of those he is responsible to, Joseph applies this to his present real estate broker career. Should you have questions please feel free to contact Joseph Marovitch at 514 825-8771, or firstname.lastname@example.org